Mercury News plans to shrink newsroom by 52 jobs

16% reduction ends week of newspaper industry buyouts and layoffs;
Cuts are 'painful,' says editor, but the paper will survive

San Jose Mercury News Executive
Editor Susan Goldberg said the paper will maintain its focus on technology
news and diversity. (Mercury News photo.)

The San Jose Mercury News said Friday that it would reduce its
staff by 60, including 52 in the newsroom, first with buyouts but with layoffs
if necessary.

The announcement capped a week of steep newsroom reductions at major metropolitan
daily newspapers across the country, including 500 jobs from the New York
Times Company and 100 jobs from the two Knight Ridder newspapers in Philadelphia.
The prior week, the San Francisco Chronicle accepted 90 resignations
through a disputed buyout program, and will soon cut 30 more jobs, voluntarily
or otherwise.

The entire Mercury News staff gathered at 4 p.m. in the newsroom
and on conference call from bureaus to hear Publisher George Riggs explain the rationale for the staff reductions.

Executive Editor Susan Goldberg told the staff that the newsroom reduction
to 280 people -- the lowest level in at least a decade -- would require
a "reorganization" of the paper's journalism operations, but that
the paper's high standards and core areas of coverage would survive.

"This is a very painful step for everybody here," Ms. Goldberg
said in a telephone interview from her office Friday night. "Given
the difficulties across the entire industry and those specific to the Bay
Area, I was somewhat relieved to be able and stand up to say that we were
going to offer buyouts rather than layoffs, and I think there was a sense
of relief about that across the newsroom."

But Luther Jackson, the executive officer of the San Jose Newspaper Guild,
the union representing journalists and other employees, called the cost-cutting
"a stunning
blow" to both journalists and the community.

"It's a tragedy for our members and it's a tragedy for the readers
who will get less in the paper," Mr. Jackson told Grade the News. "And
ultimately it's a tragedy for the shareholders."

The mood in the Mercury News newsroom was somber on Friday, said
Griff Palmer, the paper's database editor, who is also secretary and treasurer
of the Guild. "It's going to mean that journalism is going to practiced
very differently at this newspaper," he said.

The newspaper whose newsroom topped 400 people at the height of the dot-com
economic boom in Silicon Valley could not avoid downsizing to reflect a
local economy that never recovered. But the larger problem, Mr. Palmer said,
is that the stock market offers no slack to news organizations in less profitable
years.

"It's not just in journalism," he said. "Wall Street is
demanding the same kinds of sacrifices throughout the American economy --
the insatiable demand for ever-greater profits irrespective of economic
conditions. A lot of it is that there are market forces at work."

The announcement of staff cutbacks was the second in a week for Knight
Ridder. On Tuesday it announced that it would offer buyout incentives to
75 employees at the Philadelphia Inquirer and 25 at the Philadelphia
Daily News.

Later that day, the New York Times Company announced it would shed 500
jobs through buyouts and layoffs; newsroom losses will include 45 at the
Times and 35 at the Boston Globe, which the Times
owns.

Two weeks ago, the publicly traded Knight Ridder, the nation's second-largest
newspaper chain, announced that earnings
per share would fall 20%, which it attributed to higher paper costs
and health insurance premiums.

After the cuts were announced in Philadelphia, Walker Lundy, the former
editor of the Philadelphia Inquirer, told
National Public Radio that newspaper companies "are eating their
seed corn."

"I fear for their future because you just can't save your way into
profit increases every year," he said. "If you're running a steak
house, you still have to serve them steak."

Mr. Jackson, the San Jose union officer, echoed Mr. Lundy's critique: "Any
company can cut into its R&D to achieve a one-time dividend, but it's
not a great long-term strategy."

But Ms. Goldberg, a former reporter and USA Today editor, said
executives at the Mercury News realized that "we have to operate
in the economic reality of our time."

"None of us wanted to do this, but we are at a painful place in our
business," she said. "We held off making this announcement for
five years, trying through attrition and deep sending cuts to avoid this.
Our only option is to reorganize in the very best way that we can to continue
to put out an excellent newspaper.

"Realistically there are going to be some things we can't do anymore,"
she said. "We have been getting smaller over a number of years. This
will cause us to really look again at what our priorities are. The coin
of the realm is exclusive local coverage. Specifically, as it relates to
technology, and covering the diverse segments of our community."

Yet Knight Ridder has invested a significant amount of money on experiments
in Bay Area journalism this year. In February it purchased the free tabloid
Palo Alto Daily News and its four sibling publications for an undisclosed
sum, and in May launched an East Bay edition.

Then this summer the Mercury News orchestrated a thorough redesign,
folding the local news section into the main news section. But that effort
lasted only 10 weeks, as readers
who liked the paper the way it was threatened to cancel their subscriptions.

The Mercury News is offering departing employees a severance package
of two weeks' pay for every year of service up to 44 weeks' worth; that's
in addition to two weeks for every year up to 60 weeks' worth. Extended
health benefits range from six months for junior employees to two years'
full coverage, or five years' partial coverage, for early retirees.

The buyout offers will come on Monday. Employees have until Nov. 10 to
apply.

The Guild said in a memo
on its Web site, that the recent cuts are only the latest in a series
over the last five years that will harm its members and journalism. In 2001
the paper bought out 38 employees.

This time, it may be more difficult, some employees said.

"It's just sad to see the Mercury News shrink," said
Lynne Dennis, a copy editor and past president of the Guild. "It was
a really impressive place when I came to work here 14 years ago and it still
has some great people. I don't think they'll find 52 people who want to
bail out of here."

*CORRECTIONS:Due to a source error, an earlier version of this story mischaracterized Mr. Riggs comments to the staff as referring to a disappointing third quarter earnings report by Knight Ridder. Mr. Riggs referenced revenue projections for the Mercury News rather than its corporate parent's recent performance.

Grade the News previously reported "notes" sent to staff about the need to conserve office supplies. There was one such memo.

Grade the News characterized the redesign of the Mercury News that folded the local news section into the front section as lasting "only a few weeks." The change lasted 10 weeks from June 20 to Aug. 29.

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